Changes

The CRA was passed into law by the U.S. Congress in 1977 by a [[liberal]] [[Congress]] under President [[Jimmy Carter]] to encourage those earning low incomes to obtain mortgages." Only one banker, [[Ron Grzywinski]] from [[ShoreBank]] in [[Chicago]], testified in favor of the act.  [http://www.fdic.gov/regulations/laws/rules/6500-2515.html]

The CRA was passed into law by the U.S. Congress in 1977 by a [[liberal]] [[Congress]] under President [[Jimmy Carter]] to encourage those earning low incomes to obtain mortgages." Only one banker, [[Ron Grzywinski]] from [[ShoreBank]] in [[Chicago]], testified in favor of the act.  [http://www.fdic.gov/regulations/laws/rules/6500-2515.html]

[[Thomas J. DiLorenzo]] said, "The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various "neighborhood organizations," as they like to call themselves, such as [[Association of Community Organizations for Reform Now (ACORN)|"ACORN" (Association of Community Organizations for Reform Now)]]." <ref>[http://www.lewrockwell.com/dilorenzo/dilorenzo125.html The Government-Created Subprime Mortgage Meltdown], Thomas J. DiLorenzo, ''LewRockwell.com''</ref>

[[Thomas J. DiLorenzo]] said, "The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various 'neighborhood organizations,' as they like to call themselves, such as the [[Association of Community Organizations for Reform Now (ACORN)]]." <ref>[http://www.lewrockwell.com/dilorenzo/dilorenzo125.html The Government-Created Subprime Mortgage Meltdown], Thomas J. DiLorenzo, ''LewRockwell.com''</ref>

The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the [[United States Federal government|federal government]] considers an institution's application for deposit facilities, including mergers and acquisitions.  The CRA is enforced by the financial regulators ([[FDIC]], [[Office of the Comptroller of the Currency|OCC]], [[Office of Thrift Supervision|OTS]], and [[Federal Reserve System|FRB]]).  In 1995, as a result of interest from President Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.  These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for five years.  Thus in 2002, the regulators opened up the regulation for review and potential revision.

The CRA mandates that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the [[United States Federal government|federal government]] considers an institution's application for deposit facilities, including mergers and acquisitions.  The CRA is enforced by the financial regulators ([[FDIC]], [[Office of the Comptroller of the Currency|OCC]], [[Office of Thrift Supervision|OTS]], and [[Federal Reserve System|FRB]]).  In 1995, as a result of interest from President Clinton's administration, the implementing regulations for the CRA were strengthened by focusing the financial regulators' attention on institutions' performance in helping to meet community credit needs.  These changes were very controversial and as a result, the regulators agreed to revisit the rule after it had been fully implemented for five years.  Thus in 2002, the regulators opened up the regulation for review and potential revision.

|title=Clinton Administration Further Liberalizes the Community Reinvestment Act   

|title=Clinton Administration Further Liberalizes the Community Reinvestment Act   

|url=http://clinton6.nara.gov/1993/12/1993-12-08-briefing-by-bentsen-and-rubin.text.html

|url=http://clinton6.nara.gov/1993/12/1993-12-08-briefing-by-bentsen-and-rubin.text.html

|publisher=The White House }}</ref> with an effective starting date of [[January 31]], [[1995]] were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans.  Massive new provisions to CRA that forced banks to issue $1 trillion dollars in bad loans and indirectly fund the work of radical left-wing organizations." <ref>[http://www.grasstopsusa.com/freemarketsolutions.html Your Blast Fax], ''GrasstopsUSA.com''</ref>

|publisher=The White House }}</ref> with an effective starting date of January 31, 1995, were credited with substantially increasing the number and aggregate amount of loans to small businesses and to low- and moderate-income borrowers for home loans.  Massive new provisions to CRA that forced banks to issue $1 trillion dollars in bad loans and indirectly fund the work of radical left-wing organizations."<ref>[http://www.grasstopsusa.com/freemarketsolutions.html Your Blast Fax], ''GrasstopsUSA.com''</ref>

Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like [[Countrywide]], that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization.  This is known as the secondary market for mortgage loans. The revisions allowed the [[securitization]] of CRA loans containing [[subprime lending| subprime mortgages]]. The first public [[securitization]] of CRA loans started in 1997. <ref>{{cite web

Part of the increase in home loans was due to increased efficiency and the genesis of lenders, like [[Countrywide]], that do not mitigate loan risk with savings deposits as do traditional banks using the new subprime authorization.  This is known as the secondary market for mortgage loans. The revisions allowed the [[securitization]] of CRA loans containing [[subprime lending| subprime mortgages]]. The first public [[securitization]] of CRA loans started in 1997. <ref>{{cite web

|title=FIRST UNION CAPITAL MARKETS CORP., BEAR, STEARNS & CO. PRICE SECURITIES OFFERING BACKED BY AFFORDABLE MORTGAGES   

|title=FIRST UNION CAPITAL MARKETS CORP., BEAR, STEARNS & CO. PRICE SECURITIES OFFERING BACKED BY AFFORDABLE MORTGAGES   

==George W. Bush Administration's Proposed Changes of 2003==

==George W. Bush Administration's Proposed Changes of 2003==

In [[2003]], the [[George W. Bush|Bush]] Administration recommended what the [[The New York Times|NY Times]] called "the most significant regulatory overhaul in the housing finance industry since the [[savings and loan crisis]] a decade ago."  <ref>{{cite web

In 2003, the [[George W. Bush|Bush]] Administration recommended what the [[The New York Times|NY Times]] called "the most significant regulatory overhaul in the housing finance industry since the [[savings and loan crisis]] a decade ago."  <ref>{{cite web

|title=Bush Administration Attempts to tighten lending regulation|url=http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print

|title=Bush Administration Attempts to tighten lending regulation|url=http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print

|publisher=The New York Times}}</ref>  The change was to place two of the primary agents guaranteeing subprime loans, [[Fannie Mae]] and [[Freddie Mac]] under supervision of a new agency created within the [[United States Department of the Treasury|Department of the Treasury]].  The changes were generally opposed along Party lines and eventually failed to happen as a result of Democrat efforts in opposition.<ref>{{cite web

|publisher=The New York Times}}</ref>  The change was to place two of the primary agents guaranteeing subprime loans, [[Fannie Mae]] and [[Freddie Mac]] under supervision of a new agency created within the [[United States Department of the Treasury|Department of the Treasury]].  The changes were generally opposed along Party lines and eventually failed to happen as a result of Democrat efforts in opposition.<ref>{{cite web

==Changes of September 2005==

==Changes of September 2005==

Among banks and the regulatory agencies, there was a consensus that data collection, recordkeeping, and reporting requirements imposed a heavy burden on small community institutions.  As a result of a [[2002]] review of the CRA regulations, and revision of an initial [[Federal Deposit Insurance Corporation]] (FDIC) proposal following a public commenting period that was largely negative, the FDIC, [[Office of the Comptroller of the Currency]] (OCC) and the [[Federal Reserve Board]] (FRB), made substantive changes to the implementation of regulations for the CRA for banks (not thrifts).   

Among banks and the regulatory agencies, there was a consensus that data collection, recordkeeping, and reporting requirements imposed a heavy burden on small community institutions.  As a result of a 2002 review of the CRA regulations, and revision of an initial [[Federal Deposit Insurance Corporation]] (FDIC) proposal following a public commenting period that was largely negative, the FDIC, [[Office of the Comptroller of the Currency]] (OCC) and the [[Federal Reserve Board]] (FRB), made substantive changes to the implementation of regulations for the CRA for banks (not thrifts).   

Previously, all institutions over $250 million in assets were subject to a three-part CRA test that covered lending (including community development loans), qualified investments, and services (including community development services) to their assessment areas.  Institutions less than $250 million were subject only to a lending test.  

Previously, all institutions over $250 million in assets were subject to a three-part CRA test that covered lending (including community development loans), qualified investments, and services (including community development services) to their assessment areas.  Institutions less than $250 million were subject only to a lending test.  

However, as of September 1, [[2005]], only those institutions with more than $1 billion in assets were subject to the three-part test. Institutions below $250 million remain subject to only a lending test, and a new CRA test was created for institutions with assets between $250 million and $1 billion.  This latter category, referred to as Intermediate Small Banks, is subject to the same lending test to which institutions under $250 million were subject; along with a new combined community development test that covers community development loans, qualified investments, and community development services.  The $250 million and $1 billion asset thresholds also were indexed to the [[consumer price index]] and could change annually.  Thus, all institutions remain subject to the CRA test.  These substantive changes were intended to be a compromise between changes advocated by banks and community groups.

However, as of September 1, 2005, only those institutions with more than $1 billion in assets were subject to the three-part test. Institutions below $250 million remain subject to only a lending test, and a new CRA test was created for institutions with assets between $250 million and $1 billion.  This latter category, referred to as Intermediate Small Banks, is subject to the same lending test to which institutions under $250 million were subject; along with a new combined community development test that covers community development loans, qualified investments, and community development services.  The $250 million and $1 billion asset thresholds also were indexed to the [[consumer price index]] and could change annually.  Thus, all institutions remain subject to the CRA test.  These substantive changes were intended to be a compromise between changes advocated by banks and community groups.

However, the changes were not received positively by all community groups. Changes to tests conducted on the Intermediate Small category were viewed by some as decreasing the institutions' obligations to meet lending requirements of low- and moderate-income households.  Racial inequities in [[mortgage]] acceptance rates (as reported by [[Inner City Press]], [[the National Community Reinvestment Coalition]], [[ACORN]] and other groups) are cited as a primary reason to maintain or even increase the scope of the CRA.

However, the changes were not received positively by all community groups. Changes to tests conducted on the Intermediate Small category were viewed by some as decreasing the institutions' obligations to meet lending requirements of low- and moderate-income households.  Racial inequities in [[mortgage]] acceptance rates (as reported by [[Inner City Press]], [[the National Community Reinvestment Coalition]], [[ACORN]] and other groups) are cited as a primary reason to maintain or even increase the scope of the CRA.